Editor’s Note: This article was originally written about Digit, but they charge a monthly fee now. I suggest you use Dobot which works almost the exact same way, but without the fees. You can read my Dobot review here).

“If you’re constantly scouring the Internet for deals or whipping out your coupon binder, you could be saving boatloads of money on everything from groceries to office supplies. But, what if you actually transferred those savings into an actual savings account?

Eric Nisall from DollarVersity once tricked himself into saving money by doing exactly that. Each time he used a coupon or earned significant savings somehow, he would move that money into a special account. Over time, this helped him build a stash of cash that practically came out of nowhere, he says.

‘So, if I went to the grocery store, or any shopping really, I took the ‘total savings’ from the bottom of the receipt and transferred it,’ says Eric. “I transferred all of my overtime payments as well. Since I only budgeted for gross spending and regular paychecks, I didn’t notice any difference in my everyday account.’”

I have two non-sequiturs* that I’ll save until the end so I can get to the real point.

This sounds like a very cool way to save money. I immediately dismissed it because I’m Lazy and I’m not going to go into my bank account and physically transfer the money. When you are on the go, it simply doesn’t make a lot of sense. I could save receipts for home and do it then, but it still is “bookkeeping” and part of my message is that you shouldn’t spend time managing your money.

It was then I realized that I had my DigitDobot account. I can just text, “Save 13.72” in the SMS thread with them on my phone and move on. Dobot will transfer the money out of my checking account and put it in their (FDIC-protected) savings account.

One person asks for an app to make this easy and the author of the article agrees it would be “amazing.”

The very next person asks if someone has heard of Digit and proceeds to explain how it squirrels away little bits of money each day. This is my main reason for using Digit. However, the person bringing up Digit and the people responding don’t bring up the texting functionality of Digit that is the amazing app that the author is looking for. It seems like it was brought up as an alternative to Nisall’s way of saving money rather than a way to easily implement it as a complimentary savings tool.

* 1. I had dinner at a Five Guys with Eric last year at FinCon. First time I had gotten a chance to really talk with him. Great guy.
2. This is the first time I’ve had to embed three layers of quotes with the “total savings” quote in the article. I have to admit that I didn’t know what to do here, so I just stuck with the single quotes.

Rather than give that answer, I’ve always responded with “the more a purchase costs, the more you should research it.”

Then I realized that I never wrote an article about it. I’ve been giving this information to everyone else except my readers. What an epic fail! (Is describing something as an epic fail in 2015, an epic fail itself?)

I think the concept is fairly self explanatory, but let’s dig into anyway.

There are some things that are going to matter greatly in your personal finance life. They are usually big purchases such as houses, cars, weddings, even having kids. (Yes, I know kids aren’t a purchase, but that decision spawns a lot of other purchases.) Then there are things that aren’t going to matter so much, such as adding some gum at the grocery checkout line.

If it’s a big purchase that’s going to be part of your life for some time, it’s worth putting a lot of thought into it. I had a friend who thought about a purchase of a car for a couple of years. That’s an extreme example. If we were discussing a $700 coffee table book, I’d probably have to think about it for 4-6 months. Okay, I’d simply reject it on the grounds that it is a $700 coffee table book, but if it were something a little more practical I’d put some time into it.

When I take this time, I usually find that I don’t need it at all. Sometimes I realize that I don’t even want it. I’m not immune to impulse buying, but having this policy in place substantially curbs it.

I realize there’s a difference between researching and thinking about a large purchase. However, I’m going to lump them together. I often tell myself that I’m “researching the best option”, when I’m really debating whether or not I need something new. For example, I’ve been researching the best television for a few years now, because (and don’t tell my wife I wrote this), our current generic 55″ television does the job. (For those wondering, this is the best television.)

The biggest exception to this rule is subscriptions. They can be large purchases, you just pay for them over time. I bet some people pay more for their cable bill than other people pay for their cars (on a monthly basis). It’s definitely worth spending some time to think about those as well. I put daily coffee and lunches are in the same category of subscriptions, they are a lot of the same small purchases that add up. If you can change your habit to do other things that may be more frugal, you’ll save a lot of money there too.

If you did nothing else but follow these two bits of advice, you’d have solved about 80% of money’s golden rule of spending less than you save.

P.S.

I couldn’t think of a good image for such an abstract concept… but I enjoyed this image of a pile of money from Breaking Bad.

That’s a question that my friend Kevin asked me probably around 3 years ago. It was a simple question. He had recently had a son and he wanted to put aside money to cover his education. Kudos to him for starting early. The question lead me to write this article: Saving for College – An Exercise in Depression. In hindsight, it was a total cop-out as I never did answer his question.

Today, I think I’m going to do better… hopefully a lot better.

I have a vested interest this time around. My own son is four weeks old today and I’m in Kevin’s shoes (not entirely, but I’ll get to that the end). I got in reminder about all this from CollegeAdvantage, the place I determined had the best 529 plan for my niece and nephew. Specifically their newsletter had this image on the right (click for a larger view). The part that caught my attention is the bottom that assumed annual deposits of $2,400. For all practical purposes (minus some interest compounding) that’s $200 a month.

This didn’t answer Kevin’s question, but goes down the right track, giving me a good estimate of how much I’d have if I saved roughly $200 a month. However, it didn’t tell me how much college was going to be when Little Man is 18. Without this information I really can’t know how much to save.

When in doubt, I fire up Excel and get nerdy with some math. Here’s what my Excel spreadsheet looks like (click for larger) and I’ll explain what I did here:

On the right you’ll see three headings with numbers below them, “Monthly, Interest, and College Increase.” These are the main variables that I’m playing with here. If I save $674 a month (more on that seemingly random number later) and earn 6% interest I’ll have the amount at the bottom of the “Interest” column under the Savings heading. The Interest column represents how much money I’d have at the end of year assuming deposits and interest. I could have titled this column better, but that’s the beauty of Excel, I’m getting to the numbers quickly. For fun I’ve totaled up the amount of actually cash I’d be putting aside by saving $674 a month. So putting $145,584 over time yields me $350,957 when Little Man is 21. I didn’t factor in taking the deductions out of this to actually pay for college, so there’s room for improvement here. It is important to remember that this is an estimate and there’s no guarantee of earning 6%.

Now let’s turn our attention to the right column of College Costs. Using the “College Increase” value, I can estimate how much college might cost Little Man at age 18. The 4% is just a best guess. Ideally, I would know how much college costs are expected to go up over the next years. Perhaps some research group has a good answer there. I settled on 4% because quite honestly, if you put a 8% number in there the last year of private college is $212,000. I don’t see that happening. Even at 4% the last year being $96,000 looks pretty daunting. However, in 18 years it might not be. I’ve totaled up the last four years of the college costs and you can see that public college is likely to cost around $184,500 with private school costing $363,000. Now it becomes a little clear where that $674 a month came from… that amount gives me the $350,000 range that covers 4 years of private college.

The last piece to the puzzle is where did I get the information for the public and private school costs to start with right now? The answer is Collegeboard’s annual estimates. They did all the heavy lifting give me a number for how much an average public or private college would cost with most of the typical fees rolled in.

So now that I’ve gone through all this math, let me make things easy for you. Saving for College has a College Cost and Savings Calculator, which is dead simple. You just put in a child’s age and it tells you a number that you need to save. I put in $0 just now and it came up with a $602 number that I have to save each month. From there, you can adjust the scenarios just like I could with my Excel spreadsheet. If I had seen this calculator first, I would have skipped the spreadsheet, but the spreadsheet does give me helpful checkpoints. When I did it a couple of weeks ago, I believe that number was $674. When I plugged that $674 number into my Excel spreadsheet things started to fall into place.

The calculator from Savings for College also has a lot of other valuable information. For example, it assumes a 6% cost of college increase using historical information. The 4% assumption in my spreadsheet looks to have been an underestimation. If that stands true, the last year of private school for Little Man is going to cost $143,543. Zoinks!

There are still a few different factors at play here. Going back to the CollegeAdvantage chart, there are taxes to consider, but 529 plans can help with that. If you are saving in a regular brokerage account, who knows what long-term capital gains are going to be at that time? Again, you just take your best guess and adjust as you get closer.

Now for the fun part… I get to throw most of this research in the trash. It turns out that Little Man appears to be eligible to get free public education thanks to my wife’s GI Bill with the military. I knew that it was a tremendous benefit, but this exercise has put it in a whole new light.

What’s this? Two book reviews in two weeks? Are you really reading Lazy Man and Money? Have I gone mad?!?!

For years I’ve shunned book reviews. Why? Reading a book in addition to all the blogs and other things I read daily is a lot. It takes me 6 to read a book on a good day (I’m not a fast reader), and then writing up the review can take a couple more. It’s a commitment and not one that fits well with my cat-like attention span.

So why am I reviewing another book this week? There are two reasons. One is that it’s from Jean Chatzky. Despite the fact that I’ve been waiting three years for an email interview that her publicist promised, I think she’s got some of the best advice of any personal finance guru. The other reason I’m reviewing it? It is 109 pages and just about every page consists of just a few sentences. Some are simply pictures. I didn’t time myself, but I’m guessing that almost anyone can get through it in about 40 minutes.

Today’s book is Money Rules: The Simple Path to Lifelong Security by Jean Chatzky. The book itself consists of 94 rules. I’m surprised at the number. You’d think they’d stretch it to 100 or 101 for marketing purposes. It seems like it wouldn’t have been that hard to come up with a few more. Since the book is so short, this review will be as well. The 94 tips in general are pretty good ones, but ones that many would expect to know. For example, there was one about smoking, essentially pointing out the monetary costs to it. I’m on the fence about criticizing it because if it weren’t there, the book might seem incomplete, but by including it, it went a little bit into the common sense territory. I think the best tips were the ones that pointed out the psychology behind spending or saving.

I didn’t find myself agreeing with all the tips though. Tip #19 suggested that you carry $100 bills rather than $20 bills because psychologically it is more difficult to spend that big bill. If you combine that with rule #18, which says that you’ll spend less if you pay in cash rather than credit, you may find yourself not being able to purchase things like lunch. Not every place takes $100 bills and some places limit the change that they have on hand. Another of the rules, #39 was so vague that I don’t understand it all, “Always get three bids. Never take the high one.” It’s in the spend wisely section, so I guess this would mean that I should get three bids for landscaping and never take the most expensive one. That seems to be over simplistic. I’m sure there’s a case where the most expensive of three landscapers does offer a better level of service.

Oh and I like do with all the books I review, just to prove that I did read the book I’ll point out the page with the error. Page 101, which has tip #88 should be “leaving $20,000 to your kids”, not “leaving $20,000 to you kids.” The irony that I’m a great proofreader of other people’s writing and a terrible one of my own is not lost on me.

The Bottom Line: I’m of two minds on this book. On one hand, there’s great value in having something concise and to the point. On the other hand, it’s not a lot of information for $13. I could see it as a gift for someone graduating college. It’s got enough of the beginner tips, and it doesn’t require a commitment to read. It also says, “I spent nearly $15 on you and I care about your financial future”, so that’s a good thing.

When you think of great minds in personal finance you may think of Suze Orman, Dave Ramsey, or Jean Chatzky. You probably don’t think of a dog, but perhaps you should.

A few months ago my dog started doing something I had only read about in children’s books… burying dog biscuits in our yard. I remember the first time I saw him do it. I grabbed my wife and exclaimed, “Look at Jake! He’s being a dog!” (Sometimes, I’m not a wordsmith.) For a while, I thought he was just being a stupid dog. This past weekend when he retrieved one of his buried bones, something in my mind clicked.

Are you Smarter than a Dog?

Biscuits are like money for my dog. He was saving the biscuit for a rainy day when biscuits aren’t readily available. He’s learned to do what so many Americans have difficulty doing… passing up instant gratification for future benefits. I think this is noteworthy for two reasons:

As my wife reminds me from time to time, “he’s a freaking dog.” (I give him more human-like privileges than most dog owners.) We didn’t train him to bury bones and he’s never seen another dog do it. Saving appears to be hard-wired into his brain… why do we have such difficulty with it?

The second reason I find it noteworthy is that there’s significant risk and no reward to burying a bone for later. The bone may get washed away by rain or stolen by zealous squirrel. The bone itself will even likely have less “value” to a dog as it will be covered in dirt. When people save their money in banks, it comes with some security (FDIC) and they are rewarded with interest. People should be the ones doing the saving, not dogs.

This isn’t the only way he saves. Jake loves food – he’ll eat anything and everything and ask me for more. However, we found that if we give him food and leave the house, he won’t eat until we get back. I think his rationale is that there’s no guarantee we are coming back, so he better conserve his food until the providers of his food are back.

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